International business development is an exciting and rewarding career path, but it also comes with many challenges and risks. How can you manage the uncertainties and complexities of working across different markets, cultures, and regulations? Here are some strategies that can help you balance risk and reward in international business development.
Before you enter a new market or pursue a new project, you need to do a thorough analysis of the potential opportunities and threats. You can use tools such as SWOT (strengths, weaknesses, opportunities, and threats) or PESTLE (political, economic, social, technological, legal, and environmental) to evaluate the external and internal factors that can affect your success. You should also research the market size, demand, competition, customer preferences, and entry barriers. This will help you identify the most attractive and feasible options and avoid wasting time and resources on low-priority or high-risk opportunities.
I believe it is important to be clear about what is most important to you as a business. Is it about the level of market size and flexibility, a light regulatory environment , access to skills, the offer of grants or other incentives? In dealing with many investors over the years there have been many occasions where this has seemed unclear, with priorities changing as we journeyed through the process. Lack of a clear understanding of these priorities at the beginning is a recipe for a decision later regretted.
Understanding the rules is critical to your ability to assess and mitigate risk. Trade is primarily about risk. If you don’t know what the rules are, there are plenty of people who do. Ask! There are relatively very few markets that are inaccessible because of risk, as ping as it is understood.
Balancing risk and reward is crucial and challenging, yet from my experience several factors can help achieve or approach that balance. 1. Market research is essential - understanding the market specifics applied to your industry, as well as the local regulation, economic and cultural environment too. 2. Attending conferences is a practical way to get a glimpse of the difficulties you might face, and the prospects that lie ahead, through networking opportunities with key people and potential local partners from the industry. 3. Competitive analysis is also critical when you enter a new market, as well as a comprehensive risk assessment coupled with a risk mitigation strategy in case those risks become reality - and some of them will.
I agree, and would add that you need to consider the regulations around how you intend to operate. There may be licenses needed, tax implications, activity codes and labor laws to consider, among many others. The more upfront research done, the better prepared for success a company will be.
Working abroad can be unpredictable and dynamic, so you need to be flexible and adaptable to changing situations. You should not expect to achieve the same results or follow the same processes as in your home market. You should also be realistic about the time, cost, and effort required to establish and maintain relationships, build trust, and overcome cultural and linguistic differences. You should set SMART (specific, measurable, achievable, relevant, and time-bound) goals and monitor your progress and performance regularly. You should also communicate clearly and frequently with your stakeholders, partners, and clients to align your expectations and address any issues or feedback.
Balance Risk by Diversifying Your Portfolio By investing in different types of assets, you can lower the overall risk of your portfolio and reduce the impact of market volatility. Consider investing in stocks, bonds, real estate, and other assets to spread the risk across different asset classes.
No matter how well you plan and prepare, you will always face some risks and uncertainties in international business development. You should anticipate and identify the potential sources of risk, such as political instability, currency fluctuations, legal disputes, ethical dilemmas, or operational disruptions. You should also evaluate the likelihood and impact of each risk and develop contingency plans and mitigation strategies. You should also diversify your portfolio and avoid relying on a single market, customer, or supplier. You should also seek expert advice and guidance from local professionals, such as lawyers, accountants, or consultants, who can help you navigate the legal, regulatory, and cultural nuances of the market.
Over my years of International business development, or lets call it "Internationalization", I have seen the same problem over and over again regardless of the country. It always comes down to, what company structure and quantity of shareholders is the right amount to make sure the following is achievable. - How many nationals if any do I need to form it - What are the bank requirements and how my structure fulfils those requirements - Am I recruiting someone from the location, if so, a national or a foreigner, visa requirements? - Who is taking my accountancy and tax filing. Using my network of 75 countries of lawyers and accountants I have managed to land hundreds of companies across the globe. Never underestimate preparation.
And don’t forget to engage and press government agencies for advice and support. Challenging them on issues you may be concerned about can be very revealing - and sometimes rewarding.
One of the key advantages of international business development is that you can leverage your unique strengths and capabilities to create value and differentiate yourself from the competition. You should identify and highlight your core competencies, such as your product quality, innovation, customer service, or reputation. You should also showcase your cultural intelligence, which is your ability to understand, respect, and adapt to different cultural norms and expectations. You should also build on your existing network and connections, such as your colleagues, peers, alumni, or industry associations, who can provide you with referrals, recommendations, or insights.
Here are some additional several strategies to help you manage this balance effectively: Market Entry Strategies: Consider different market entry options, such as exporting, licensing, joint ventures, or wholly-owned subsidiaries. Risk Assessment: Identify and assess the specific risks associated with your international expansion, such as political, economic, legal, cultural, and operational risks by visiting the country. Currency Risk Management: USD based transactions. Cultural Competence: Invest in cross-cultural training for your staff to minimize cultural risks. Monitor and Evaluate: International growth is planned in years not months. Tailor your strategies to suit your specific circumstances and objectives.
International business development is a continuous learning process, so you should always seek feedback and evaluate your outcomes. You should celebrate your achievements and recognize your contributions, but you should also acknowledge your mistakes and failures and learn from them. You should also reflect on your experiences and identify the key lessons and best practices that you can apply to future projects or markets. You should also update your skills and knowledge regularly and stay abreast of the latest trends and developments in your industry and region. You should also seek new opportunities and challenges that can help you grow and advance your career.
One of the biggest challenges and risk factors is cultural misalignment. Many companies (and people) approach international markets as their domestic ones. This is a big mistake. Aside from obvious regulatory or economical differences, the most important decision-making factor are always "people". And people in a different country have different cultures, habits, expectations. Successful international development frames different cultures in their rightful context. You adapt your strategy to respect your client's diversity.